Home Bias

Tendency to invest in companies from the own country.

Home bias is a term used in portfolio theory and refers to the outweighing of home market equities in the portfolios of retail investors.

In theory, an allocation of investments across several markets is more advantageous. In practice, national securities dominate. There are three reasons given for this: Higher transaction costs when trading on foreign exchanges, avoidance of exchange rate risks, less transparency due to little information and language barriers."

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